Good news for both sellers and buyers

The drop in the latest certificate of entitlement (COE) premium for motorcycles can be best described as a ray of sunlight piercing through the gloomy sky.

At a three-year low of $3,512, the latest category D premium is about $2,000 less than the bike COE premium two weeks ago.

On Facebook, motorcycle enthusiasts rejoiced at the prospect of getting new rides.

Motorcycle distributors, most of whom are still adopting a wait-and-see approach, said that lower COE premiums for bikes should encourage buying.

Guan Hoe Suzuki spokesman Quah Soon Aun said COE premiums in the $3,000 bracket appear more "palatable".

He told The New Paper: "It is a good start. Before the announcement, I had sold three big motorcycles.

"After the announcement, I immediately had five orders for big capacity motorcycles."

Don’t be in a hurry to buy...(COE) prices could drop to as low as $2,000. Distributor of KTM motorcycles,
Mr Ong Kim Hua

The drop in motorcycle COE premiums is believed to be due to people not buying the vehicles when COE prices remained expensive, in the $6,000 bracket.

As a result, some motorcycle distributors or speculators hoping to make big bucks were left holding on to expensive bike COEs that have a six-month lifespan.

When nobody registers a new motorcycle, the COE is returned into the pool as unused COEs, causing speculators to lose their $200 deposit on each COE bid.

But will cheaper premiums be the new order of the day?

For Mr Ong Kim Hua, distributor of KTM motorcycles, it remains to be seen if they will stabilise over the coming months. This is because the reality on the ground does not show an immediate buying spree, he said.

Mr Ong said: "I am sure if more unused motorcycle COEs are returned, it will increase the COE supply and lower prices. Don't be in a hurry to buy. Wait a little... (COE) prices could drop to as low as $2,000."

Another industry observer said one trend that could happen is those who bought their motorcycles when COE premiums were high may scrap their bikes and buy ones during a time of lower bike COE premiums.

When they scrap their motorcycles, they will get a prorated refund on their COE and can use that to buy new motorcycles.

The observer, who declined to be named, said: "This will generate much-needed sales in the (motorbike) industry. We all know that high motorcycle COE prices is a situation that doesn't help buyer and seller."

Since 2013, yearly new motorcycle registrations have seen a declining trend - from about 11,600 motorcycles in 2013 to about 7,400 in 2015.

There was an improvement last year, with new registrations rising to around 8,300 units.

Still, this year started off on the wrong foot for potential bike owners.

The first six months of the year saw record bike COE prices that hovered in the $6,000 bracket, spiralling to a new record in the second half of March at $8,081.

When it was announced in February that a new-tiered additional registration fee scheme would be instituted to make it fairer for those eyeing "bread and butter"-type motorcycles, the bigger capacity motorcycles, which became more expensive to own, saw a drop in demand.

Some relief came when the practice of contributing motorcycle COEs into Category E or the Open category was stopped.